Wha….? The market crashing is a good thing? Did we really see that right?
Yes, you did. And this interesting DD from u/autistic-lord succinctly lays it out. As usual, Apes Army has reproduced this DD from Reddit without editing, and we take absolutely no credit whatsoever for it. This is not financial advice. Do your own research.
TL;DR: Blackrock are bagholding Evergrande stock. There are so many synthetics out there that if Blackrock and others who are bagholding want to sell their stonks, they have to get back the shares that Shorts borrowed many times over first.
Why Market crashing is a good thing.. and why institutions wont be able to sell yet.
As many of you guys fears of institutions selling – let me explain thru knowledge and data to dumb it down for y’all why it wont happen as you may think. And current SP500/DJIA crashing is extremely good for us.
All of y’all have propably have seen some Ortex screenshots, on the far right there’s something Utilisation.
Utilization equals to the percentage of shares that are being lend that can be lend(mostly from institutions, but also from retail investors as well) – currently we’re at almost 92%. Keep that in mind.
Share’s outstanding are currently at 513M, while 25.21% is owned by institutions. Quick math gives us 129 327 300 shares in institutional hands (not all of which lend their share, most but not all – some are also shorted thru ETF’s on which i have written over here on number of times).
Some of y’all are paniking due to them being also heavly invested in bankrupting evergrande which started this whole mess (for example and especially blackrock, vanguard). I get it. But thats wrong. Because we know for the fact that our biggest owners are also lending their shares to the short sellers – we know we from past articles from 2020 about amc and especially gme (because GME tried to do share recall for theirs 2020’s shareholders meeting) while they said “fook it, we dont need to vote”.
What does it tells us? That shares that ware being borrowed from institutions cannot be sold -> because they are currently lend out -> meaning that short sellers need to buy them to first buy them back, and then eventually they could potentially sell.
And here’s the thing. Lets assume for a second that this whole mess with chinase market really did hurt blackrock etc, stock market situation on top of that – and this would logically mean that they are in need of money. The more the better.
And while eventually hedgies buy back their shares (to return to them), they would increase the price heavly which in turn creates loop (also because also smaller short selling hedgies would have to bail on shorting amc) and if you know, in business there is no such thing as friends. In their best interest would be to wait and/or eventually cause the price to either hold (for a bit longer for hedgies to bail) or increase even futher. And why sell just for small chunk of the price, while there is much higher upside potential? Remember, there are no friends in business.
Also one of the reasons why im mentioning this is because:
a) since early may hedgies/instutions have to meet margin requirements each hour (previously for a year of covid pandemic they just had to be “good” with their liquidity at the very end of day).
b) contrary to popular beliefs of some idiots a margin call takes couple of days from the moment its on – keep that in mind
c) with spx/djia bleeding red for past five days (especially today) and vix skyrocketing it increases the odds of having troubles due to liquidity insolvency (aka meeting margin requirements)
Oh, and alaso the last thing. Yeah, yeah, i know we have negative beta and today we moved mostly with spx (and iwm ofcourse, but that aint surprise), but the thing with beta it aint always straightforward inversly correlated, sometimes the beta need time before kicking in.
thats all for now, i wanted it to be clarified. havent wrote anything here for ages bc im sick of memes and you guys calling each other shill or posting stuff without verificating data (and thus further increasing levels of missinformation.
All in all, i see no reason to be afraid. And for those that either know or remember me (check my post history and my old DD’s on amc that i posted since early february with math and all that shit), know that i know what im talking about. When theres time to be afraid, then theres time to afraid. But it is not now. Not even close.
In conclusion: hedgies r fook’d